MiEnergy Electric Co-op midway through residential energy storage pilot

MiEnergy has been researching utility-scale battery installations for several years. Ted Kjos shared that “while the economics are not quite right yet,” to make such a project cost effective, "MiEnergy could add something like this to our portfolio in the not-to-distant future.” Especially at points in their distribution grid with large commercial and industrial customers, "utility-scale battery installations can add resiliency, provide voltage control, and improve power quality issues,” said Kjos.

When asked why the cooperative elected to do a residential pilot project, both Ted and Kent talked about MiEnergy’s involvement over the last couple of decades with distributed energy resources. Ted pointed to the two community solar gardens launched by MiEnergy along with the 600-some members with on-site power generation, such as solar PV, small wind, or other generators. Kent said that by the fall, MiEnergy will have broken ground on four projects consisting of 9 MW of utility-scale solar as well, and that “as a result, storage fits in with the things we do.” Whitcomb continued, “we have been heavily involved with load management since the late 1970s,” and that is the main aspect of research in the pilot.

Load management allows utilities to control end-use appliances and reduce electrical consumption during peak demand times. Peak power needs dictate the required generating capacity, but peaking power plants run only periodically, and thus have a high cost relative to electricity generated. Batteries contribute to load management when the utility discharges them during peaks. This reduces cost by eliminating the most expensive electricity needed on the grid. “Our highest cost is wholesale power, at 60 to 70 percent, so load management is important,” said Kjos.  “Our greatest potential is with residential customers,” he continued, “thus this project is for residential batteries.”

Kent also relayed that some of the technologies needed to allow MiEnergy to control the batteries at the pilot sites require two-way communication, automation, and interoperability, which all lay the groundwork for other innovation. “Using my crystal ball as a distribution utility, I see that microgrids will come soon and we will want to enable our systems to have that interoperability,” Ted said. MiEnergy sees this as a chance to test technology that will be a “win-win” for their customers.

To locate member sites for the pilot installations, MiEnergy put a notice in their newsletter and talked about the pilot at their annual meeting. They were surprised at the high number of responses: “Our early-adopter members were very excited and wanted to be the first to test this technology,” said Kent. MiEnergy’s screening criteria included high-speed internet access, a service panel in a conditioned space, and room for batteries that allowed for ventilation and access. Next, the members had to give MiEnergy permission to install a sub-panel (essential load panel) and to control the charging and discharging of the batteries. MiEnergy paid the full cost of the system and there is a legal agreement with each member that covers insurance and liability.

Originally the project was to include four installations with 16 kWh of battery storage and an 8 kW inverter, but an additional grant added two more sites in Iowa with 10 kWh of storage and 7 kW inverters. The batteries are Lithium Iron Phosphate, which are less energy-dense than Lithium-ion but have a longer life with more charge and discharge cycles. Two of the sites had on-site solar, and one had a generator.

The cooperative-member agreement is for a five-year pilot, with a possible five-year extension. Four of the six installations were completed in the fall of 2018 and will soon provide the second full year of data, with the last two becoming operational in 2019. “There was a peak alert in February 2020,” said Kent “and then we used the controls to allow the batteries to discharge, so we are just getting into this important phase.”

When asked what they hoped to learn and what they are learning from the pilot, Whitcomb and Kjos had several items.

1. Electricity usage: The first goal was to study how charging the batteries off peak and discharging on peak changed electricity usage. “Typical schemes for adding batteries are not designed for load management, but rather for off-grid installations,” Kent noted, “and they can actually increase electricity use.” MiEnergy is developing different control strategies, which is why the high-speed internet was essential. Ted shared some details: “We have struggled as to what the strategy should be, including when and how long to charge as well as the level to discharge to. We were surprised by much higher than anticipated efficiency losses in charge and discharge round trips, which included round trip efficiency losses of 26%-33%. These high efficiency losses lead to an additional 4-5 kWh lost daily if the battery is fully discharged on a daily basis.
2. Business model: MiEnergy is also hoping to create a potential business model for sale or lease of battery systems to their members. To do this they need to understand issues from technical to business, such as battery technology and availability, operation and maintenance, customer motivation, incentives, rate structure, and sales models. During the pilot they are learning a lot about all of these things.
3. Costs and incentives: MiEnergy selected Sonnen batteries for their functionality, quality, length of experience, and availability in the USA. Despite the fact that the cooperative bought the batteries and did the installations, there was a wide cost range from site to site. With respect to incentives for members, the co-op wants to expand battery availability while at the same time keeping members on the grid, and not providing cross-subsidies.
4. Working with solar: For the locations that had on-site solar this brought up the question of the electricity source for battery charging. Kjos said that "members with solar wanted to charge the batteries from the solar array, but it was more economical to charge them from the grid.” He continued, “Information like this helps us to figure out the proper mechanisms to make it work out for the member.” He said that net metering for solar is also a factor in their models.
5. Back-up power: One of the main benefits for the participating members is that they have a battery backup if the power goes down. “The units have real-time wattage usage & remaining battery life display so members have information on how much battery charge is left,” said Ted. If there was a power outage due to natural disaster, the members can then adjust their home usage depending on how long the outage will be, and in the case of those with solar PV arrays, potentially charge when the sun came up.

Ted shared that there is a history of innovation with electric cooperatives, leading MiEnergy to think about providing battery systems. “Now in Minnesota there are co-ops that own and install geothermal loops or are installing broadband, and 25 years ago TV satellite dishes were often leased from co-ops. Co-ops tend to provide products and services that aren’t readily available. If the retail sector enters the market and has better economies of scale, then co-ops will usually exit the business, but until then this is a way for them to provide services to their members.”

While leasing of battery systems might be available through MiEnergy in the future, the costs at the residential level do not pencil out yet. Using the models similar to other distributed energy systems like solar PV, these systems would take at least 43 years to pay for themselves, long past their lifespan. Thus, the project would not have been possible if not for support from grant funding. Still, Ted shared that the co-op is optimistic: “We have to think about where we want to be and then figure out how to get there. We will learn and not expect to arrive in one leap.”